The cuts amount to just under 5 percent of the workers at the mine, which started producing last year, and include full-time employees and contractors, said an Oyu Tolgoi employee, who declined to be named as the issue was sensitive.

"Given where we are now in the lifecycle of our project and the urgent need to reduce our costs, it is critical to the success of the business to address this now," Rio Tinto said in a memo to staff, dated May 28 and seen by Reuters.

Rio officials had no immediate comment on the memo when contacted by Reuters.

There were about 7,500 staff and contractors on the Oyu Tolgoi project as of the end of December 2013, most of whom were Mongolian, according to its website.

The company, which has targeted $1 billion worth of cost cuts from its global operations this year after slashing $2.3 billion last year, said it needed to rake in savings as copper prices are hovering just above four-year lows.

"Copper operations around the world are facing significant challenges with volatile markets and prices. Oyu Tolgoi is no different," said the memo to Oyu Tolgoi staff.

The latest layoffs follow the loss of around 1,700 jobs last year, when Rio Tinto stopped work on a $5 billion-plus expansion of the mine due to a long-running dispute with the Mongolian government over project financing and costs on the project.

Mongolia has become more conciliatory this year and the government and Rio Tinto have both said they expect issues to be resolved by September, the deadline that prospective lenders have put on their project financing commitments.

Turquoise Hill reported net revenue of $108 million from Oyu Tolgoi for the first quarter. (Reporting by Terrence Edwards; Editing by Sonali Paul and Matt Driskill)